Best Bitcoin Brokers in Hong Kong

With over seven million inhabitants on 1104 square kilometres and an important economic and financial sector, Hong Kong is one of the world's major cities. 95 percent of Hong Kong's inhabitants are of Chinese descent with a predominantly Cantonese mother tongue.

Although Hong Kong is part of China, the city-state enjoys independence from Mainland. After having been a British colony for about 150 years, Hong Kong was returned to China in 1997.

In the course of this there was an agreement, a Chinese-British joint declaration on Hong Kong, that Hong Kong's democratic market economy system should remain in place for at least 50 years alongside the authoritarian socialist system of the People's Republic of China.

Thus Hong Kong's role as one of Asia's financial centers remained secure. This autonomy allows Hong Kong to have its own laws, customs duties and even its own currency.

Cryptocurrency Regulation in Hong Kong

The Hong Kong Financial Supervisory Authority (SFC) announced rules for crypto funds in November 2018. It also announced that it would regulate crypto exchanges.

Hong Kong thus joined the global trend towards crypto regulation, according to Bloomberg. Hong Kong-based fund managers who invest more than 10 percent of their portfolio in crypto assets now require a Type 1 SFC license.
It is also a prerequisite for professional securities trading.

Trading platforms that only serve institutional investors can test their business model in a so-called regulatory 'sandbox'. This gives FinTechs the opportunity to test their products in a live market environment, taking into account anti-money laundering laws and other rules.

In general, traders should note that the crypto asset market is still very young and trading rules may not always be transparent and fair. Outages are not uncommon, as are market manipulation and abuse. And there are also, unfortunately, downright scandals and frauds.

Hong Kong has experienced a veritable boom in the crypto sector in recent years. Some of the world's largest crypto exchanges - including BitMEX, Binance and OKEx - have settled in the former British colony.

Until 2018, the cryptocurrency sector in Hong Kong was largely unregulated. Some see SFC's move as a reaction to the increasing crypto investments of intentional investors who are to be protected in this way.

Many take a rather positive view of SFC's crypto-regulation: Realistically, there were only two possible ways forward - regulate or prohibit - so it could be seen as a smart move that Hong Kong has decided to regulate.

Hong Kong as a Tax Heaven for Bitcoin Brokers

The Hong Kong Special Administrative Region is particularly attractive for business start-ups because the small state has its own special tax law. In Hong Kong, for example, there is no VAT or sales tax. Corporate taxes amount to just 16.5%. Long-term capital gains are also not taxed in Hong Kong.

A property tax is charged annually to the owner of land or buildings in Hong Kong at the standard rate of 15% on the net value of such property or land.

Under the mandatory pension scheme, an employer is required to pay a mandatory contribution for an employee equal to 5% of the employee's monthly income.

Corporate income tax and the associated bureaucratic burden for a company in Hong Kong is extremely low compared to other industrialised nations. The time required for administrative formalities (hours) is only a fraction of the effort required by companies in the USA or Germany. The total tax portion of the profit amounts to 22.9% in Hong Kong while German companies must give up nearly 49% , for US-American companies it's 44%.

The maximum income tax rate is just 17%. People earning less than 45,000 HKD pay only 2% tax.

The profit tax on freelance professions, trade or commercial income is only 15%.

With it's tax law, it is not surprising that modern Bitcoin brokers are particularly fond of being founded in Hong Kong. With its liberal legal situation regarding cryptocurrencies (especially compared to Mainland), trading and gambling as well with being as a kind of tax paradise, the Chinese Special Administrative Zone offers an ideal environment for cryptocurrency broker companies.